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Howard Riefs

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The state of golf course sales
« on: March 15, 2012, 04:36:13 PM »
Informative Bloomberg article on recent golf course sales.

http://www.bloomberg.com/news/2012-03-15/trump-post-tiger-golf-bottom-fishing-signals-rebound-mortgages.html

Median 3Q price: $3 million, down 33% from '06, says a broker.
"Golf combines two favorite American pastimes: Taking long walks and hitting things with a stick."  ~P.J. O'Rourke

Emile Bonfiglio

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Re: The state of golf course sales
« Reply #1 on: March 15, 2012, 04:48:59 PM »
nice article Howard. Lets be honest, Tiger has had ZERO effect on new courses being built during that period of dominance he had. Freddy Mac and Fannie Mae where the real people responsible.
You can follow me on twitter @luxhomemagpdx or instagram @option720

Anthony Gray

Re: The state of golf course sales
« Reply #2 on: March 15, 2012, 04:53:12 PM »


  Are they good investments now?


Mark Steffey

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Re: The state of golf course sales
« Reply #3 on: March 15, 2012, 05:09:12 PM »


  Are they good investments now?



i'd take a course if my dad owned one and he gives it to me.  (and maybe then only a public track.  generally speaking it seems like demographics are moving away from the country club set)

Jeff_Brauer

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Re: The state of golf course sales
« Reply #4 on: March 15, 2012, 05:26:01 PM »
I think they vary widely as investments in different markets, depending on how revenue streams are.  It notes revenues are down a few %, which is typical.  Also typical is that golf courses can do quite well with no debt, easily covering cost of operations.  Low debt can often be carried, but not the original debt of $10-20M.

If $3-4M cost about $220K a year in debt, then you might have $1.5 Mil in other operating costs.  If you can net $1.7M in revenues you break even.  If there is play of say 25K rounds, then you need to average about $68 per round to break even, and maybe $82 for reasonable profit.

So, low debt helps, but there are markets where it may not help enough.  But, the math is pretty simple, and at least it's good to see the "smart money" starting to focus on golf again.  Others will follow.

BTW, I did get the monthly email from NGF today and they noted a lost of 157 golf courses vs 9 openings. A high proportion of those were low cost courses and 9 hole courses.  I would be most are in rural areas, and courses in cities are struggling to get by until better times come along, but at least they have some customers to shoot at.



Jeff Brauer, ASGCA Director of Outreach

Ken Moum

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Re: The state of golf course sales
« Reply #5 on: March 15, 2012, 06:31:14 PM »
Informative Bloomberg article on recent golf course sales.

http://www.bloomberg.com/news/2012-03-15/trump-post-tiger-golf-bottom-fishing-signals-rebound-mortgages.html

Median 3Q price: $3 million, down 33% from '06, says a broker.

Around here, a quarter of that price is about right.  The Donald Ross I belong to recently sold for about $750,000.

K
Over time, the guy in the ideal position derives an advantage, and delivering him further  advantage is not worth making the rest of the players suffer at the expense of fun, variety, and ultimately cost -- Jeff Warne, 12-08-2010

Tiger_Bernhardt

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Re: The state of golf course sales
« Reply #6 on: March 15, 2012, 08:22:01 PM »
Jeff put forth the math. There are a number of groups which are looking for the right course or courses to buy. It is just business. What is the course cash flowing? Or what is the dirt worth for another purpose? Also what is condition of course and capital needs?

Tim Martin

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Re: The state of golf course sales
« Reply #7 on: March 15, 2012, 08:48:42 PM »
Trump has only bought properties with proximity to large metro areas. I`m sure there is plenty of analysis performed as to what the dirt is worth without an operational golf course as well as zoning issues for alternative uses for the land. I`m wondering how bad he gets hurt if Aberdeen doesn`t pan out.

Steve_ Shaffer

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Re: The state of golf course sales
« Reply #8 on: March 15, 2012, 08:59:37 PM »
There's a sale about to happen in Scottsdale soon if the members don't exercise their right of first refusal and match the current offer.
"Some of us worship in churches, some in synagogues, some on golf courses ... "  Adlai Stevenson
Hyman Roth to Michael Corleone: "We're bigger than US Steel."
Ben Hogan “The most important shot in golf is the next one”

John Kirk

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Re: The state of golf course sales
« Reply #9 on: March 16, 2012, 01:05:18 AM »
Freddy Mac and Fannie Mae where the real people responsible.

Let me be succinct.  You're wrong.

Respectfully,
John

Carl Johnson

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Re: The state of golf course sales
« Reply #10 on: March 16, 2012, 10:17:55 AM »
Freddy Mac and Fannie Mae where the real people responsible.

Let me be succinct.  You're wrong.

Respectfully,
John

But [FM & FM] were certainly a significant piece of the pie, along with other investors, the lenders, the borrowers, real estate brokers, builders, and financial advisors, not to mention Congress and the government administrators and regulators . . . lots of blame to go around.

Respectfully,
Carl
« Last Edit: March 16, 2012, 10:21:19 AM by Carl Johnson »

JC Jones

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Re: The state of golf course sales
« Reply #11 on: March 16, 2012, 12:06:38 PM »
My guess is many of the home loans in these golf course communities exceeded the limits of what FM & FM can purchase. 
I get it, you are mad at the world because you are an adult caddie and few people take you seriously.

Excellent spellers usually lack any vision or common sense.

I know plenty of courses that are in the red, and they are killing it.

John Kirk

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Re: The state of golf course sales
« Reply #12 on: March 16, 2012, 01:18:58 PM »
I don't wish to hijack the thread.  I reacted to what I see as a political talking point, a commonly held belief that I think is wrong.

Fannie Mae and Freddie Mac's charter is to purchase loans from the banks, thereby freeing more bank capital for home loans.  By 2006 or so, FM and FM were buying lots of sub-prime loans, since home loan originators were lowering standards to compete, and gouging unsuspecting, less sophisticated buyers when possible.  Ultimately, the unsavory lending was for one purpose - to feed the demand for collateralized debt obligations (CDOs), issued by big banks as a high interest yielding investment.

I see Freddie Mac and Fannie Mae as well down the list of blame.  Let's put key governmental deregulation at the top.  I see this housing/pricing reset problem as being half over, maybe.  Maybe in ten more years homes will have returned to historical values, but there's a problem with the nation's changing wage structure, with less middle-class jobs, and more minimum wage jobs.  Ultimately, the price of houses has to match up with the wage structure of the people.

Now, where were we?  Ah yes, golf course sales.  After all, golf courses are built with construction loans, and I would argue their value is mostly separate from the homes that surround them.  On the other hand, a course surrounded by abandoned homes has no chance.  A few stories I've heard place the value of bankrupt courses at 15-20 cents on the dollar.

You may tell I'm bitter about the explosion of golf development at the expense of the following twenty years.  Maybe it will always be a boom and bust business, but the way it went down, it hurt my favorite architects' future opportunities here in the States.

Carl Rogers

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Re: The state of golf course sales
« Reply #13 on: March 17, 2012, 06:53:30 PM »
Freddy Mac and Fannie Mae where the real people responsible.

Let me be succinct.  You're wrong.

Respectfully,
John

But [FM & FM] were certainly a significant piece of the pie, along with other investors, the lenders, the borrowers, real estate brokers, builders, and financial advisors, not to mention Congress and the government administrators and regulators . . . lots of blame to go around.

Respectfully,
Carl
Because many were responsible does not give absolution to any of them, including Goldman Sachs.
I decline to accept the end of man. ... William Faulkner